Daily Newsletter
August 13, 2019Non-Directional Strategies
Semi-Directional Strategies
Directional Strategies
Bitcoin/Crypto
View Doc's New Book
August Expiration
Day(s)
:
Hour(s)
:
Minute(s)
:
Second(s)
Market Commentary
Right on cue, another piece of ‘new information” hit the tape this morning and drove the S&P up by 50 handles. Unfortunately the price is still within the “box” which is very typical of price action during these range-bound escapades. The price will thrash around up and down until it finally releases in one direction or another.
On one hand I like how the price has responded to yesterday’s “scary low” that we have been looking for. The pattern does fit, however the price was unable to close at the highs of the day and the 50sma was used once again as a selling point. I still give the eventual direction of release equal odds regardless of today’s bull-fest. I’m not sure that anything has been solved other than short-term certainty which evaporates by Christmas.
Short-Term Outlook: We’ve been in a massive consolidation pattern since early 2018, or almost another “horizontal bear market” like we had in 2015-2016. All that energy that’s been coiled up has to go somewhere, the policy and odds favor it to go higher, but we’ll know which price levels to respect to warn us if that energy’s going lower instead.
Please sign up for our free daily crypto report here.
Offensive Actions
Offensive Actions for the next trading day:
- No additional orders for tomorrow..
Defensive Actions
Defensive actions for the next trading day:
- Any vertical, butterfly, or diagonal debit spreads that we set up are risk-managed from day one, and no defense is really required.
Strategy Summary Graphs
Each graph below represents a summary of the current performance of a strategy category. For an explanation of what the graphs mean, watch this video.
Non-Directional Strategies
Semi-Directional Strategies
Directional Strategies
%
%
%
Technical Analysis Section
Market Internals: Volume was above-average today with advancers minus decliners showing a very strong +385, closing near the highs of the day.
SPX Market Timer : The Intermediate line has turned up just above the Lower Reversal Zone and is now bullish. No leading signals today.
DOW Theory: The SPX is in a long term uptrend, an intermediate uptrend, and a short-term uptrend. The RUT is in a long-term uptrend, an intermediate sideways trend, and a short-term uptrend. The Dow is in an intermediate uptrend and short-term uptrend.
VIX: The VIX fell to 17.52, inside the Bollinger bands. The RVX fell to 20.71, and is inside the Bollinger bands.
Fibonacci Retracements: The SPX is showing a deep pullback to the 6.18% fib retracement of the most recent swing, and the price has now bounced back up to about the 50% retracement of the swing down from last week.
Support/Resistance: For the SPX, support is at 2730 and overhead resistance at 3028. The DOW has support at 24800 and overhead resistance at 28399. The RUT has support at 1460 and resistance at 1618.
Fractal Energies: The major timeframe (Monthly) is charged again with a reading of 52. The Weekly chart has an energy reading of 48, just below fully-charged. The Daily chart is showing 44, recovering from exhaustion from the sell-off. Larger timeframe energies are waiting on a very big move, which will start with the smallest timeframes.
Other Technicals: The SPX Stochastics indicator fell to 35, mid-scale. The RUT Stochastics fell to 33, below mid-scale. The SPX MACD histogram rose below the signal line showing an increase in momentum. The SPX is above the lower Bollinger Band with support at 2852 and resistance at the upper band at 3065. The RUT is at the lower Bollinger Band with its boundaries at 1481 to 1602. The Bollinger Bands were starting to “squeeze” on both the SPX and RUT, implying a forward move which appears to have started.
Position Management – NonDirectional Trades
I have the following positions in play at this time:
- SPY 9SEP 276/277*301/302 Long Iron Condor (8/12) was entered for $.17 debits on both the put and call side. I will look for a 200% return on either side of the trade .
I like the probabilities of a Long SPY Condor at this point. The daily chart is recharging quickly, and the next move out of the “box” could either be a big drop or a mind-bending higher low slingshot. The 9SEP SPY cycle had about an 11.8 point EM when we spec’ed this out.
I have no positions in play:
This is not the right character of market for this strategy at this point.
I have no current positions:
Calendar spreads are good for markets in quiet/trending character. If the market reverts back to quiet/trending, then I’ll look to continue this method; if we see the daily chart go into exhaustion I’ll set up a back week calendar.
The calendar spread tracking sheet is available for your download here. Yes, if you follow the math in the sheet, all of the numbers account for commissions in and out of the trade. Please note: If you trade these positions please keep the size small, to the point where you “do not care” about the success or failure of this position.
I have the following positions in play:
- SLV Stock – I have 1000 shares of the SLV that was assigned at the $15 level. I closed the SLV 30AUG $16 calls for $.42 debit, and rolled out to the SEP $17.50 calls for $.18 credit. This was a debit roll but the price of the SLV rising hedged it off.
- CSCO – I sold the 16AUG $50 puts (6/10) for a $.64 credit. I will look to close this trade for $.10 debit. Earnings are tomorrow after market close so if I can close down the short puts for at least a $.30 or lower debit I will do so. They are $.37 bid x $.40 offer now.
Even though this has been a decent pullback, I’d like to stay conservative in the near term and look for something a little deeper before we go back to the well.
Position Management – Directional Trades
Thoughts on current swing strategies:
- 8/21 EMA Crossover – Looking at the next signal;
- RSI(2) CounterTrend – None at this time.
- Daily S&P Advancers – Looking for the next signal to go long when we have single-digit advancers on the ADSPD. This happened for a few minutes on Monday, and might show up again in the near term.
- Swing – None at this time..
The Bear appears to be over. In the near term I expect to see large consolidation swings, which might provide “value” entries for these coins on a dip.
Investors should currently be looking to find technical entries to warehouse BTC/ETH/LTC assets for eventual trades on Alt-coins. You should also be looking to devices like “trezor” or other cold-storage devices to keep your assets off of the network, or other secure wallet such as Navcoin. Relying on the security of your broker is no longer good enough; no one can log into your ETrade account and “steal” your stock assets, but the whole nature of Cryptocurrencies and their portability means that someone can grab your assets and transfer them elsewhere. I will continue to discuss the tradingview platform in daily videos as I think that it is currently the best way to chart the “big three.”
From Friday’s close at SPY 291.62, there is a +/-5.875 EM into this coming Friday; this almost exactly the same as last week’s 5.87 EM. The EM targets for this Friday’s close are 297.50 to the upside, and 285.75 to the downside.
The lower EM got punched out last week but closed within the range by Friday. We’ll see if either side is a fade this week..
I will start playing directional bear spreads once we see upside exhaustion on more than one timeframe.
The scan that I discussed in the 8/4/2018 video is available to download for thinkorswim here: http://tos.mx/OvdVnz I will also be adding a second Larry Connors scan to this section as well; here is the Connors Crash scan: http://tos.mx/BhHuKL
I have the following positions in play at this time:
- PEP 9AUG 133/134 Debit Call Spread (7/12) entered for a $.50 debit. This trade will expire OTM on Friday.
- MSFT 30AUG 141/142 Debit Call Spread (7/28) entered for a $.50 debit and will look for 50% return. Today was a good recovery and we might yet see this one fire for our target.
No more entries in the short run.
The “Hindenburg Strategy” is meant to capture “value” from successive corrections that lead up to the final “death spiral” with a Bear Market. The basic principle is to buy 3-month out long puts on the SPY, and to finance those puts by the sale of credit spreads.
I have the following positions at this time:
- SPY 18OCT 269 puts (7/23) were entered for $1.70 debit. I closed these puts down for a $4.29 credit (8/6) as the /ES futures tested/undercut the 200 ma overnight, and rebounded hard. This gave me a profit of $257/contract, or a 151% return on capital.
If we see a decent bounce back up I might consider reloading. I do think that we might see another wave of selling to come yet.